FY 2024 Budget Analysis: The DOD’s Fourth Estate

The agencies that make up the Department of Defense’s Fourth Estate requested $141.7B in budget resources for fiscal year 2024, a slight increase of $400M compared to the $141.3B enacted in FY 2023. Breaking down the request into the major buckets of the budget – Operations and Maintenance, Procurement, and Research, Development, Test and Evaluation – reveals where changes will be felt and what industry might expect in the fiscal year to come.

Operations and Maintenance (O&M)

Also called “steady state” funding, O&M provides the resources Defense Agencies need to perform their missions. Overall, these agencies requested $93.2B in O&M funding, which $343 less than the Fourth Estate received in FY 2023.

Referring to the chart below, we can see that the requested O&M budgets for most Defense Agencies are either flat or up only slightly. The request for the Defense Security Cooperation Agency (DSCA) in FY 2023 is an outlier because of additional funding the agency received from the Ukraine Supplemental Appropriation Act, 2023 and Additional Ukraine Supplemental Appropriation Act, 2023.

The big change for FY 2024 is the first listing of an O&M budget for U.S. Cyber Command. Of the $1.65B requested by USCYBERCOM $1.3B will go for Cyberspace Operations. The remaining $332.6M is dedicated to headquarters operations.

Procurement

Turning to the funding requested for new acquisitions, Defense Agencies asked for a total of $7.0B, which translates into $1.6B less than the funding received in FY 2023. This is a pretty big drop.

Breaking down this request by agency shows mixed results for the different major agencies involved. U.S. Special Operations Command requested an increase of $118M with the AC/MC-130J special mission aircraft accounting for $97M of that total.

The Chemical and Biological Defense Program also notched a request for an additional $73M. A total of $58M of that is for Chemical, Biological Protection and Hazard Mitigation.

U.S. Cyber Command, meanwhile, requested $129M in Procurement funding for Cyberspace Operations. The investment is listed under “Major Equipment” so presumably the requirements that will be met involve purchasing hardware.

Research, Development, Test, and Evaluation (RDT&E)

Lastly, looking at funding that Defense Agencies use for R&D, the requested budget is $36.5B, comprising $1.5B more than enacted in FY 2023. This is a good sized increase.

Agencies requesting an increase in RDT&E funding include the Missile Defense Agency (MDA), which asked for an additional $293M for Improved Homeland Defense Interceptors and $215M for the Ballistic Missile Defense Midcourse Defense Segment.

The Defense Advanced Research Projects Agency (DARPA) requested an additional $327M. Of that total the agency requested $211M more for the anachronistic sounding Network-Centric Warfare Technology program.

Lastly, the Chemical and Biological Defense Program (CBDP) boosted its planned funding for CBDP Engineering and Manufacturing Development by roughly $81M and U.S. Cyber Command, in its first standalone request, asked for $1.0B to fund the following initiatives:

• Cyber Operations Technology Support - $469M
• Robust Infrastructure and Access - $170M
• Data and Unified Platform - $139M
• Cyber Training Environment - $115M
• Cyber Command and Control - $95.7M
• CYBERCOM Activities - $65.5M
• Cyberspace Operations Forces and Force Support - $2.7M

Bottom Line

Flat funding is coming to the Fourth Estate, but opportunities still abound for industry partners working at some of those agencies. Competition for a smaller pot at a few agencies might become stiffer due to fiscal headwinds.